Ranchi, Aug 29 (UNI) Jharkhand has expressed concern over the Centre’s proposed GST rate rationalisation, warning that the changes could reduce the state’s annual revenue by nearly ₹2,000 crore unless a fresh compensation mechanism is guaranteed.
In a meeting of finance ministers from eight states – Jharkhand, Himachal Pradesh, Delhi, Punjab, Rajasthan, West Bengal, Kerala, and Tamil Nadu – held in New Delhi on Friday, participants highlighted the potential fiscal impact of abolishing the 12% and 28% GST slabs.
Jharkhand, a state rich in coal, steel, and minerals, argued that under the destination-based GST model, manufacturing states like itself are disadvantaged compared to consumer-driven states. Officials said that further slab rationalisation without compensation would jeopardise welfare schemes, tribal development programmes, and infrastructure projects.
Under the GST framework launched in July 2017, states were assured 14% annual revenue growth for five years, with compensation payments continuing until June 2022. Jharkhand and other states are demanding that any new rate rationalisation be accompanied by a similar compensation mechanism.
The eight-state coalition also proposed funding the shortfall through a special cess on luxury and “sin” goods. Leaders framed the debate as a test of cooperative federalism, emphasising that while simplification is welcome, it must not compromise state finances.
The GST Council is scheduled to meet on September 3-4, where states are expected to formally submit their memorandum.
